Canadian oil and gas producer Strathcona Resources is reportedly in talks to acquire Caltex Resources in a deal that could be worth approximately $552.97m (C$700m).

The potential deal could boost the Canadian firm’s enhanced oil recovery (EOR) portfolio in Saskatchewan, Canada, Reuters reported citing four sources familiar with the discussions.

Following the appointment of an investment bank earlier this year to run the sale process, Caltex Resources received bids from at least six public and private oil companies, one of the sources told the news agency.

The sources added that the talks are in an advanced stage, but could still fail.

The production output of Caltex totals around 12,000 barrels of oil equivalent per day.

This represents a fraction of Strathcona’s production output, which is about 80,000 barrels of oil equivalent per day.

Caltex is engaged in the extraction of conventional and heavy oil using new and proven technologies including EOR.

The firm operates the Druid facility near Kerrobert, Saskatchewan to produce heavy oil, as well as Greater Bodo, a polymer-based EOR site along the Alberta-Saskatchewan boundary to produce crude.

Strathcona was formed in 2020 through the merger of two Waterous Energy Fund-backed companies, Strath Resources and Cona Resources.

It is focused on the exploration, development and production of oil and gas resources in Western Canada.

In this year, several North American oil and gas firms have embarked on consolidation to boost production and reduce costs while capitalising on surging oil prices.

The demand for fuel dropped last year due to the Covid-19 lockdowns.